Australia’s High Court begins hearing on commercial radio royalty cap

August 4th 2011

In the wake of two independent Government reviews and more than a decade of lobbying on the issue, the High Court has begun its deliberations on the validity of the statutory cap on royalties payable by commercial radio stations for the use of sound recordings.

From 1969, the amount payable by commercial radio stations to record companies and artists for playing their sound recordings has been capped at one per cent of a station’s gross annual revenues. The Phonographic Performance Company of Australia (PPCA), which has brought the appeal to the High Court, argues that there is no economic or social justification for Australian Government protection of the billion-dollar commercial radio industry in negotiating a royalty rate with record companies and artists.

According to the PPCA, the 273 commercial radio stations across Australia pay approximately $4 million per year for the rights to the sounds recordings they play. [1] It considers this amount to be unfairly constrained by the cap, arguing that there is no other copyright in Australia that is the subject of a statutory price cap. [2]

On the opposing side, Commercial Radio Australia argues for the retention of the cap, saying that payments for the use of sound recordings increase as station revenues increase. [3]

In addition to paying for the use of sound recordings, commercial radio stations also pay songwriters and publishers for the use of the music on the sound recordings. However, there is no statutory cap on this payment.

It is likely to be six to 12 months before the High Court hands down its much-anticipated decision on this long-standing conflict. We will keep you posted.